Offline power plants push electric grid to brink

Houston ChronicleMidland Reporter-Telegram

Published 7:00 pm, Saturday, August 13, 2011

Outages raise concerns of market manipulation

By Tom Fowler

Houston Chronicle

High temperatures were the driving force behind record power demand in Texas last week, but what really pushed the state electric grid to the brink of crisis was the large number of power plants that went offline because of unscheduled repairs.

As much as 5,000 megawatts of power-generation capacity - more than 7 percent of Texas' electric output - were offline because of equipment problems last Thursday, when the state's high voltage grid manager, the Electric Reliability Council of Texas, came close to calling for rolling blackouts.

It would have been the second time this year - and only the fourth time in 21 years - for the Texas grid to take such measures.

Between 3,000 megawatts and 4,800 megawatts of capacity were offline for unplanned outages on other days last week.

Kent Saathoff, ERCOT's vice president of system planning and operations, said it's not unusual for about 3,000 megawatts to go offline during the summer because high temperatures and long running hours inevitably lead to some equipment failure.

But in addition to last week's outages, there was a June 27 power emergency and rolling blackouts Feb. 2 that were caused by dozens of plant outages following several days of subfreezing weather.

These incidents have brought increased scrutiny of plant maintenance.

ERCOT doesn't reveal details of power plant operations for 60 days because companies consider such information sensitive to their business. So figuring out which plants are offline and why is difficult to discern.

Power plant operators have an incentive to operate during the hours when demand is at its peak: Wholesale spot prices can reach as high as $3,001 per megawatt-hour, or $3 per kilowatt-hour, as they did for several hours repeatedly last week. A power plant operator could lose money if it had to buy power on the spot market to fulfill supply obligations a downed plant couldn't meet.

But in theory, a company that owns several power plants could help create power scarcity and drive up prices by choosing to take a plant offline during the peak hours. The company might lose revenue from the plant that's offline but make up for it with the higher prices its other units receive.

A report by the Texas Public Utility Commission's independent market monitor on the Feb. 2 incident, when dozens of power plants in Texas went offline during a lengthy cold snap, concluded those outages were not caused by market manipulation.

But McCullough Research, a Portland, Ore., firm that advises companies and municipalities in utility disputes, noted in a report last month that Texas had faced temperature extremes like those seen Feb. 2 and during another period of tight demand in June.

That seems to indicate some other factor, not the weather, would be a fault, McCullough said.

Kent Coleman, a senior manager with the Electric Power Research Institute, an industry research group, said as a rule there are more power reliability issues in the hot weather months.

"All the electrical components are running as hard as they can right now," Coleman said. "There's a greater chance of overheated motors, cooling towers not working at the same efficiency as in cooler weather."

Typically, many plants shut down over the summer weekends to make repairs, but power demand hasn't let up recently. On Saturday, for example, ERCOT set a new record for peak weekend demand of 63,280 megawatts. That meant fewer plants - representing about 1,500 megawatts of generation capacity, according to ERCOT - were able to go offline for repairs.

ERCOT is expecting high temperatures to continue for the next couple of weeks, but slightly lower temperatures this week have officials predicting emergency measures are less likely.

In the middle of a conference call with reporters this week, however, ERCOT CEO Trip Doggett announced that a large power plant had just tripped offline unexpectedly.

The system had just enough reserves to avoid ERCOT needing to initiate the first of its four-step emergency plan, but it came close.